Proposal trustee ordered to disclose correspondence with experts

YG Limited Partnership and YSL Residences Inc. (Re), 2026 ONSC 4566
Is a creditor challenging a trustee’s valuation entitled to see the communications that may have shaped the expert opinions on which the trustee relied?

Summary: The Ontario Superior Court has ordered the proposal trustee in the YG Limited Partnership and YSL Residences proceedings to produce certain communications with valuation experts whose opinions were relied on to value Maria Athanasoulis’s profit-sharing claim at zero. Athanasoulis, whose claim has increased from $18 million to $25 million and was previously found to be a provable claim under the BIA, sought expert drafts, correspondence and related information ahead of her October 21 appeal of the trustee’s valuation, arguing the materials could reveal inputs that influenced the experts or the trustee. Justice Kimmel rejected the trustee’s position that the request amounted to impermissible production of its working file under s. 26 of the BIA, finding that the motion could instead be treated as a request for materials from the experts’ files and that the BIA does not operate as a complete code governing expert disclosure in this unusual claims process. Drawing on the Rules of Civil Procedure and principles of transparency and impartiality in insolvency claims adjudication, the Court found a sufficient basis for relevance and ordered production of the communications and information actually requested during the experts’ cross-examinations, subject to redactions for any material revealing the trustee’s strategy, tactics or internal decision-making. Justice Kimmel emphasized that the ruling arose from the highly unusual procedural history of this claim and should not undermine the general principle that insolvency claims processes must remain quick, practical and proportionate, observing that the Athanasoulis dispute has already delayed realization for other stakeholders.

Maria Athanasoulis filed a proof of claim that was disallowed in August of 2023 by the Proposal Trustee (“Trustee”) appointed under the Bankruptcy and Insolvency Act. Her original proof of claim was for two unsecured claims (together, the “Athanasoulis Claim”):

1.  $1 million in respect of damages for wrongful (constructive) dismissal (the “Wrongful Dismissal Claim”); and

2. $18 million in respect of damages for breach of an oral agreement that Ms. Athanasoulis would be paid 20 percent of the profits earned on the YSL Project (the “Profit Share Claim”).

On March 30, 2023, the Trustee delivered to Ms. Athanasoulis notice that it would accept her Wrongful Dismissal Claim in the amount of $880,000.39. On August 10, 2023, the Trustee delivered to Ms. Athanasoulis a Notice of Disallowance of her $18 million Profit Share Claim (the “Disallowance”).

Ms. Athanasoulis successfully appealed from the Trustee’s Disallowance in full of her $18 million Profit Share Claim by way of motion under the BIA, at which time the disallowance of the Profit Share Claim was set aside. The court directed the Trustee to investigate and value the Profit Share Claim under a bespoke procedure tailored specifically to the Profit Share Claim. The Trustee would determine the Profit Share Claim based on the revised proof of claim. If the Trustee determined that it required expert assistance to value the Athanasoulis Claim upon receipt of the revised proof of claim, the Trustee would advise the relevant stakeholders. This procedure required that all evidence be filed by way of affidavit or obtained by out-of-court examination, and granted Ms. Athanasoulis a right to cross-examine all witnesses.

The procedure ran its course and the Trustee valued the Profit Share Claim at zero by Notice of Valuation dated June 30, 2026 (the “Valuation”). The Trustee did not accept the valuation approach and methodology that Ms. Athanasoulis put forward, and adopted the approach propounded by the experts it hired in its eventual determination that her Profit Share Claim should be valued at zero. There was a $100 million difference between the expert appraisals that Ms. Athanasoulis and the Trustee had each put forward. Ms. Athanasoulis appealed the Valuation, and sought to compel certain communications with experts whose opinions the Proposal Trustee had relied upon in the Valuation.

There is nothing in the BIA that addresses the question of production of materials from experts who have provided opinions to inform the determination of a proof of claim. In a situation such as this where there is a “gap”, the Bankruptcy and Insolvency General Rules thus direct the Court to have regard to the Rules of Civil Procedure. In the absence of any express guidance or direction under ss. 121 or 135 (or, for that matter, s. 26) of the BIA, by analogy to the Rules of Civil Procedure, some semblance of relevance must be demonstrated.

The Court agreed with Ms. Athanasoulis that communications not directly referenced in the experts’ appraisal reports or the Valuation, but which could have influenced the Trustee’s ultimate decision, had sufficient relevance

In the context of the determination of claims under the BIA, the Court has found that disclosure of underlying expert reports is relevant to the transparency and impartiality, and the perception of transparency and impartiality, of a claims process. In the circumstances of this case, it was both relevant and important that Ms. Athanasoulis had a complete picture of the information and opinions underlying the Trustee’s assessment and Valuation of her Profit Share Claim.

The Trustee’s internal decision-making process and its internal notes were not “evidence” that would assist Ms. Athanasoulis in proving the value of her claim or ultimately her appeal of the Trustee’s Valuation. However, given the neutral role that the Trustee was to be playing in the development of the evidence that was ultimately considered in its Valuation of the Profit Share Claim, the Court found it hard to conceive that its correspondence or communications with the experts, or the communications between the experts, would reflect the Trustee’s internal strategy, tactics or decision-making process.

The Court ordered the Trustee to secure and produce the correspondence and communications with and among the experts, subject to the Trustee first reviewing the records and redacting any disclosures concerning its strategy, tactics or decision-making process.

Judge: Justice Kimmel

Professionals involved:

• Mark Dunn, Sarah Stothart and Brittni Tee of Goodmans for Maria Athanasoulis

• Matthew Milne-Smith, Chenyang Li and Ryan Reid of Davies for the Proposal Trustee, AlixPartners Restructuring, Inc.